JENKINS L.J. - (1.) I propose in the first instance to consider the question of tax liability on the footing that if there was any liability to tax at all the taxable receipt consisted of the value on July 27, 1953, of the shares transferred on that date to the appellants respectively (namely, Pounds 36,000 in each case), which accordingly constituted a receipt of the year 1953 -1954; putting aside for later consideration the appellants alternative argument to the effect that if, contrary to their main contention, there was any liability to tax at all, the taxable receipt consisted of the value as at the date of the deeds of covenant (namely, December 30, 1945) of the benefits conferred on them respectively by those deeds, which would be a receipt of the year 1945 -1946 and accordingly out of time for the purposes of assessment; and also the special contention put forward on behalf of Hewitt to the effect that the special contention put forward on behalf of Hewitt to the relevant office in his case was that of secretary which he ceased to hold in January, 1951, whereas the share were not transferred until July 27, 1953.
(2.) THE statutory provisions relevant to the two appeals are to be found in section 156 of, and the Ninth Schedule to, the Income Tax Act, 1952. [His Lordship read the relevant parts of paragraph 1 of Schedule E as set out in section 156, and rule 1 of the Rules applicable to Schedule E, as set out in the Ninth Schedule, and continued :] These provisions do not materially differ from their predecessors in previous income tax legislation. It is clear that the appellants are taxable under Schedule E in respect of all profits from their respective offices or employments under the company. The question is whether the benefits they received in the shape of the value of the shares transferred to them respectively were profits from those offices or employments within the meaning of the Act. We were referred, as was the judge, to many of the numerous authorities in which the courts, dealing with the particular facts of particular cases, have held benefits received by holders of offices or employments to be or not to be profits arising therefrom so as to attract or, as the case may be, escape liability to tax under Schedule E.
(3.) THE following much quoted passages state the general principles to be applied : In Herbert v. McQuade (the Clergy Sustentation Fund case) Henn Collins M.R. said : 'Now that judgment, whether or not the particular facts justified it, is certainly an affirmation of a principle of law that a payment may be liable to income tax although it is voluntary on the part of the persons who made it, and that the test is whether, from the standpoint of the person who receives it, it accrues to him in virtue of his office; if it does, not matter whether it was voluntary or whether it was compulsory on the part of the persons who paid it. That seems to me to be the test; and if we once get to this -that the money has come to, or accrued to, a person by virtue of his office - it seems to me that the liability to income tax is not negatived merely by reason of the fact that there was no legal obligation on the part of the persons with contributed the money to pay it.' Stirling L.J. said : 'I think that a profit accrues by reason of an office when it comes to the holder of an office as such - in that capacity - and without the fulfillment of any further or other condition on his part; and what we have to determine is whether the sum in question does so come to the holder of this office.' In Blakiston v. Cooper (the Easter offering case), Lord Loreburn L.C. said this : 'In my opinion, where a sum of money is given to an incumbent substantially in respect of his services as incumbent, it accrues to him by reason of his office. Here the sum of money was given in respect of those services. Had it been a gift of an exceptional kind, such as a testimonial, or a contribution for a specific purpose, as to provide for a holiday, or a subscription peculiarly due to the personal qualities of the particular clergyman, it might not have been a voluntary payment for services, but a mere present.' In Seymour v. Reed (the cricketers benefit case) Lord Cave L.C. said, after referring to the relevant statutory provisions : 'These words and the corresponding expressions contained in the earlier statues (which were not materially different) have been the subject of judicial interpretation in case which have been cited to your Lordships; and it must now (I think) be taken as settled that they include all payments made to the holder of an office or employment as such, that is to say, by way of remuneration for his services, even though such payments may be voluntary, but that they do not include a mere gift or present (such as a testimonial) which is made to him on personal grounds and not by way of payment for his services. The question to be answered is, as Rowlatt J. put it : Is it in the end a personal gift or is it remuneration ? If the latter, it is subject to tax; if the former, it is not.' I would also refer to the recent case in this court, Moorhouse v. Dooland, which may be said to be of the same order as the earlier cases above referred to, inasmuch as it concerned the liability to tax of the proceeds of collection on the ground which a Lancashire League professional cricketer was entitled to have made on his behalf by the terms of his contract with the club employing him and the rules of the league. All these cases, save Seymour v. Reed, went against the taxpayer on their particular facts.;